The People of America's Oil and Natural Gas Indusry

Growing Groundswell Against the RFS

Mark Green

Mark Green
Posted June 17, 2015

Quick rewind to 2007, when Congress enacted the Renewable Fuel Standard (RFS): The U.S. faced energy challenges – declining domestic production leading to greater dependence on imports and ever-increasing consumer costs. The RFS was conceived as a way to spur production of advanced biofuels that would help on imports and costs.

Today the energy landscape has completely changed. Thanks to surging domestic production from shale and other tight-rock formations with advanced hydraulic fracturing and horizontal drilling, the United States is No. 1 in the world in the production of petroleum and natural gas hydrocarbons. Our imports are falling, and consumers have enjoyed lower prices at the pump.

Yet, the RFS remains – with its mandates for increasing use of ethanol in the fuel supply, seemingly impervious to the changed energy landscape, even as increased domestic oil production has checked off RFS objectives one by one. Even EPA’s latest proposal for ethanol use, while acknowledging that the RFS has serious flaws, continues to try to manage the behavior of markets and consumers, ironically leaving both on the sidelines.

That was the message in a telephone briefing with reporters hosted by API President and CEO Jack Gerard. Joining the call were Wayne Allard of the American Motorcyclist Association (AMA), Heather White of the Environmental Working Group (EWG) and Rob Green of the National Council of Chain Restaurants (NCCR).  

Gerard said the RFS is fundamentally flawed because EPA assumes demand for high-ethanol blend fuel, such as E85 and E15, that hasn’t been supported by consumer demand. Part of that is consumers recognizing potential risks to engines and fuel systems posed by using E15 in vehicles that weren’t designed to use it, as well as E85’s lower energy density compared to E10 fuel that’s standard across the country. Gerard:

“Most cars are only approved by the manufacturer to use ethanol blends of 10 percent or less. Extensive testing by the auto and oil industries shows that higher ethanol blends can damage engines and fuel systems – potentially leaving drivers stranded. EPA also suggests that if refiners would produce and sell more E85 – a fuel mixture of up to 85 percent ethanol with gasoline – they would be able to meet the ethanol volume requirements EPA is proposing. But motorists have largely rejected E85. According to AAA data, E85 costs more money in the long term because it has lower fuel economy than gasoline. A tank of E85 won’t get you as far.”

Others – motorcyclists, restaurant owners, food groups – have their specific issues with the RFS. The common theme, though, is that the program doesn’t work. NCCR’s Green:

“Clearly the EPA has failed in making long-term structural changes to ease the increasing burden the RFS places on the food supply chain and commodity prices. It is past time for Congress to recognize that the RFS is a broken policy and approve pending legislation in the House and Senate that would repeal the corn ethanol mandate.  America’s consumers, diners and restaurants should not continue to pay the price for the EPA’s negligence and Congress’ inaction.”

EWG’s White:

“We really do feel like it’s time to reform the RFS, especially given the tremendous impact we’ve seen of corn ethanol on our environment, whether it be increased greenhouse gas emissions … or the pollution of our air and water and also the destruction of critical wildlife habitats. One of the things that we were promised originally in 2007 is that the RFS would be a bridge to truly sustainable biofuels. And what we’ve seen has been in effect just a bridge to more corn ethanol.”

AMA’s Allard:

“Anything over E10 absolutely is against any of our interests, because we’re afraid stations will cease to offer anything with E10 or less. Right now you can hardly ever find just plain gasoline without any ethanol in it, which is a concern with a lot of our riders. If you push to these higher blends we’re afraid there won’t be anything on the market where the motorcyclist or other small engine operators can access in order to stay within the warranties on their engines.”

Gerard said EPA should use its waiver authority to set the final ethanol mandate to no more than 9.7 percent of gasoline demand, to protect consumers who want to purchase ethanol-free gasoline. Consumers’ interests should come ahead of ethanol interests, he said. Gerard:

“What’s wrong with EPA’s proposal this time … is they’re not paying any attention to the market. … I believe consumers are becoming more and more aware of what the ethanol blend is doing. … The government can issue all sort of mandates. If consumers don’t buy it, at that point we’re just interfering in the marketplace. We’re all for environmental protection, environmental improvement. Our industry spends billions of dollars every year to get it there … but you can’t try to compel the consumer to do something that the consumer knows is not in their best interest.”

Momentum is building across a number of affected parties for action on the RFS. Gerard:

“The stars are beginning to align. … The best approach is for all of the parties to come together and resolve it. But as you can see there are some with no interest in resolving this, just pushing for more and more (ethanol). And I think now we’ve clearly put the American consumer at risk, and I think you’re going to see more and more folks coming back and saying enough’s enough, we’ve got to fix it. … The current system has clearly failed us.”

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.